0 1 2 3 4 5 6 7 8 Income Statement Revenues: Unit Price Demand 510 520 20,000 10,200,000 20,000 10,400,000 530 20,000 10,600,000 540 20,000 A 550 20,000 11,000,000 560 20,000 11,200,000 570 20,000 11,400,000 580 20,000 11,600,000 Sale revenue 160.81 B Expenses Unit variable cost Variable cost Fixed cost MACRS Rate % Depreciation Taxable Income Income taxes Net Income 120.00 2,400,000 3,000,000 14.29% 1,000,300 3,799,700 1,329,895 126.00 2,520,000 3,000,000 24.49% 1,714,300 3,165,700 1,107,995 2,057,705 132.30 2,646,000 3,000,000 17.49% 1,224,300 3,729,700 1,305,395 2,424,305 138.92 2,778,300 3,000,000 12.49% D 145.86 2,917,215 3,000,000 8.93% 625,100 4,457,685 1,560,190 2,897,495 153.15 3,063,076 3,000,000 8.92% 624,400 4,512,524 1,579,383 2,933,141 3,000,000 8.93% 625,100 4,558,670 1,595,535 2,963,136 168.85 3,377,041 3,000,000 4.46% 312,200 4,910,759 1,718,766 3,191,993 E F G 2,469,805 1,000,300 2,057,705 1,714,300 2,424,305 1,224,300 2,695,810 874,300 2,897,495 625,100 2,933,141 624,400 2,963,136 625,100 3,191,993 312,200 Cash Flow Statement Operating activities: Net income Depreciation Investment Activities: Investment Salvage Gains Tax (35%) Net Cash Flow -7,000,000 500,000 1 -7,000,000 3,470,105 3,772,005 H 3,570,110 3,522,595 3,557,541 3,588,236 J Tax rate = 35% Product life = 8 years Depreciation method = seven-year MACRS